All Suzuki dealers got hammered after the Japanese brand's U.S. sales collapsed in 2008. But for Jeremy Franklin, a Suzuki dealer in Kansas City, Mo., the past few years have been a special kind of hell.
Franklin became the youngest Suzuki dealer in the nation when he opened his store in 2001 at age 24. Sales boomed for a while but dwindled from 872 new cars in 2006 to just 44 in 2010. And Franklin has been forced to unload another Suzuki outlet at a huge loss.
He lost something else, too: his relationship with his older brother, Chad.
The two sons of longtime Kansas City dealer Pete Franklin haven't spoken for three years. The rift occurred after Chad Franklin ran an advertising promotion at his own Suzuki dealership in nearby Kansas City, Kan., using too-good-to-be-true come-ons such as "Drive a different brand-new Suzuki every year and never make a single car payment."
The scheme eventually collapsed, leaving hundreds of customers thousands of dollars underwater, with no recourse. The negative publicity eviscerated the Suzuki brand in the Kansas City area and Jeremy Franklin's business as well.
Jeremy did not use the promotion, but irate customers -- and even state investigators -- frequently confused Chad Franklin's dealership, now-defunct, with his brother's. Jeremy, 35, is now fighting to restore both his reputation and the Suzuki brand's in the local market.
Jeremy Franklin won a victory in September when a circuit court jury in Jackson County, Mo., ordered American Suzuki to pay him nearly $19 million, including $15 million in punitive damages. The court found Suzuki liable because the company had allowed Chad Franklin's promotion to continue.
Suzuki, which says it was not the instigator of the controversial sales promotion, says it plans to appeal. Jeremy Franklin says he doesn't know when, if ever, he'll get the damage award.
"This is not a place I thought I'd be when I became the youngest Suzuki dealer in the country," he said.
In 2006, Jeremy Franklin Suzuki was the No. 17 Suzuki store in the nation. Chad, meanwhile, owned a used-car dealership in the area.
Jeremy said of his brother: "He saw the success I was having with the Suzuki brand and bought a competing Suzuki store. We never were in the auto dealership business together."
In February 2007, Chad opened Chad Franklin Suzuki, later renamed Legend Suzuki, in Kansas City, Kan., 27 miles from Jeremy's store.
At first, Chad's dealership was selling five to 10 cars a month, but that changed in June 2007 when he launched his "Drive a Suzuki" promotion.
According to the lawsuit filed by Jeremy Franklin against American Suzuki, Suzuki representatives contacted Chad in the spring of that year to discuss how to boost sales at his new dealership.
The suit says Suzuki "urged" Franklin to hire a Florida ad agency, which had created ads for a similar "Drive a Suzuki" campaign used by a dealer in South Carolina. That dealer, Paul Gibson, filed for bankruptcy in 2008 when faced with a flurry of lawsuits from customers and lenders after his low-payments scheme collapsed.
Chad Franklin hired the agency and soon was bombarding the Kansas City area with TV and radio commercials. The spots were broadcast nearly 10,000 times over several months, promising that customers could drive a new Suzuki for monthly payments of less than $100 -- or, in some cases, no payments. Often there weren't even down payments.
TV spots used flashing, boldface letters to make improbable claims such as "never make a single payment" and "no payments 4 life."
The scheme worked this way: The dealer would secure a loan significantly larger than the vehicle's worth by padding the selling price with add-ons such as extended warranties and service contracts. The dealer then issued checks to customers to cover the first six to 12 monthly payments. When the money ran out, customers were told to return to the dealership, trade in the vehicle and buy a new Suzuki using the same promotion. Some customers were told the dealership was trying to build up its used-car inventory.
But when customers came back, they were told that the program had ended and that they would have to assume responsibility for the original loans. The loans frequently required monthly payments of $500 or more, for vehicles with a sticker price of less than $20,000.
While Chad Franklin ran the promotion from June 2007 through February 2008, his sales soared. By August, Chad Franklin's store was the 26th-largest Suzuki dealership in the country, according to internal Suzuki documents obtained by Automotive News.